Rethinking Paradigms

Competition is Not Freedom

from FFF

CapitAlismObjecting to the proposed merger between American Airlines and U.S. Airways, the Justice Department has filed an antitrust lawsuit against the two airlines. The rationale? The feds say that the merger would impede competition and therefore should be disallowed. The government’s action only goes to show how government officials can warp economic principles so as to justify their control over private economic activity.

In an unhampered market economy — that is, one that is not hampered by government control or regulation — people have the moral right to do whatever they want with their own property and their own money. That’s because it belongs to them. That’s what private ownership is all about. The owner, as owner, is free to do whatever he wants with his own money and his own property, so long as he doesn’t infringe in some direct way with the rights of others to do the same with their money and property.

Thus, people have the moral right to engage in any economic enterprise without a license or other form of government permission. To earn money, people will bring to market goods and services that other people want and are willing to pay for. No one is forced to buy or sell anything he doesn’t want to.

People have the moral right to sell their goods and services at whatever price they wish. In an unhampered market economy, sellers compete for the business of consumers. Those sellers who are more successful in satisfying consumers are the ones who make more money.

Consumers, for their part, have the moral right to not buy sellers’ goods and services. Since consumers are free to buy from whomever they want, they, not the producers, are ultimately the sovereigns — the ones who decide who stays in business and prospers and who doesn’t.

People also have the moral right to engage in mutually beneficial transactions with anyone in the world, without governmental interference. They also have the moral right to keep everything they earn and to decide what to do with it.

These principles are what we call economic liberty. They describe a system in which economic activity is as immune from government control as religious activity is here in the United States.

Under principles of private property, unhampered markets, and economic liberty, American Airlines and U.S. Airways have the moral right to merge their businesses. They, not the government and not society, are the owners of their businesses. As owners, they have the right to combine their efforts.

The government says that this will result in less competition and higher prices. Even if that’s true, so what? It’s their business, isn’t it? Why shouldn’t they be free to charge whatever they want? Consumers have the moral right to not purchase airline tickets. Consumers have no moral right to force the airlines to give them a ticket at a price that consumers deem satisfactory.

Under the rationale of promoting competition, the government destroys the concepts of economic liberty, private property, and free markets. In the process, it subjects economic activity to governmental control and regulation, an economic system that is no different, in principle, from that which exists in socialist Cuba.

The “promoting competition” rationale is just a sham to provide the government with the excuse to control economic activity. After all, if the feds really were concerned with promoting competition, they would be filing suit against the U.S. Postal Service, which is a genuine monopoly in every sense of the term. The law won’t permit businesses to enter into competition with it, and its prices are always artificially high owing to its privileged, monopolistic status in society.

But nary a peep about the Postal Service from the Justice Department, which purports to be so concerned about promoting competition and lower prices.

Or consider occupational licensure, which restricts competition in the effort to keep incomes of the licensees artificially higher than they otherwise would be. Do you see the Justice Department suing the medical, legal, hairstyle, or shoe-shine industries for artificially impeding competition with state licensure? Of course not.

What happens if companies continue merging until only one is left? So what? It’s their property. They have the right to do whatever they want with it. As long as there is freedom of entry – that is, so long as government isn’t artificially preventing or inhibiting competition with monopoly grants or licensure laws, as it does with the Postal Service and various lines of work, everyone should be free to merge and combine to his heart’s content.

No matter how large a business becomes, in an unhampered market economy it must still satisfy consumers in order to survive. Those lawyers in the Justice Department think that just because a private business gets big, it will end up like the Postal Service.

Nonsense! The Postal Service’s privileged position is owing to the government’s grant of special monopoly privileges. Take a look at the list of the top 100 biggest businesses in 1960. My bet is that very few of them are in the top 100 today. That’s not because the government enforced its antitrust laws against them. It’s because consumers took their business elsewhere.

In other words, we don’t need government to break up big companies or to “promote competition.” The market process does that every effectively all on its own.

The purpose of government is not to destroy freedom in the name of promoting competition. The purpose of government is to protect the exercise of fundamental rights, including the rights of private property and economic liberty.

Leave American Airlines and U.S. Airways alone. Better yet, repeal the anachronistic Sherman Antitrust Act, which dates back to 1890.